52 pression is that these things go more smoothly here than in the United S " tates Singapore government officials refuse to accept the inevitability of economic reverses of any sort. When the British gave up their military facilities, the government converted the naval base into a commercial shipyard, and none of its three thousand employees had to miss a day's work. The Royal Air Force's Changi Air Field was trans- formed into one of the world's best airports, plus a regional center for aircraft maintenance. As is typical of Singapore, Changi's two terminals are shapeless and lack any hint of aesthetic distinction, but no other air- port functions so efficiently. The newly opened Terminal No.2-named Airtropolis, a word that few Chinese can pronounce- has a sauna, a gymnasium, a nursery, a business center, eleven restaurants, and fifty-one shops, which aren't al- lowed to charge prices higher than those in the city. In-transit passengers wIth more than two hours between planes can sign up for a free city tour. Economic planners averted another potential crisis a decade or more ago, when they saw that Singapore couldn't continue to compete with Hong Kong, Bangkok, and other Asian cities for factories that turn out cheap goods produced by low-cost labor. Singapore decided to change its emphasis to high- technology products-a gamble that, if successful, would dramatically improve the island's standard of living. To drive out low-wage industries like textiles and shoes, the government forced wages up; Singaporeans got an average wage increase of fourteen per cent in 1982 alone. As a way to lure high-tech enterprises, the government built a "science park," with research facilities for biotechnology, microelec- tronics, and other growing fields. If a pioneering company had a good idea but no capital, it could locate in Singapore and find a willing invest- ment partner in Singapore's govern- ment. The over-all strategy brought a flood of high-tech companies to Singa- pore's door. Now the government, never one to rest on its laurels where the economy is concerned, is pushing two new plans to spur growth. The first represents a diversification move: taking some of the nation's foreign reserves and in- vesting them in companies overseas- a plan that includes building schools abroad for the children of Singaporeans sent to work for those companies. The second is what is called a growth triangle. Instead of pushing out the remaining low-wage factories and rejecting new ones, Singapore is work- ing jointly with Malaysia and Indone- sia to locate such factories in the south- ern Malaysian state of J ohore and in Indonesia's Riau Islands-both adja- cent to Singapore-while keeping the manufacturers' corporate head- quarters in Singapore itself. The strategy is brilliant: not only does Singapore get new skilled jobs but the country- a Chinese island dwarfed by neighboring Muslim states that posed a real threat in the nineteen-sixties-can make the Malaysian and Indonesian economies increasingly dependent on Singapore's existence. "In the Riau Islands, they've set up a joint venture with Indone- sians," a Western diplomat explained to me. "This Riau authority is getting a lot of clout to bypass Jakarta's bu- reaucracy. If Jakarta were running it alone, nothing would happen. Jakarta has had a plan to develop the islands since the mid-nineteen-seventies, and it had been ninety-five per cent a failure. But now it's taking off. You have Singapore actively assisting Western companies to wade through the bureaucracy and corruption in Malaysia and Indonesia. Creating an economic region with Singapore as the hub insures Singapore's economic growth. And it's also providing politi- ca] stability because of the growing economic interdependence." Singapore, the bastion of capitalism, has never hesitated to establish gov- ernment-owned companies. The gov- ernment owns or controls some of the biggest banks and insurance compa- nies and also shipyards, hotels, an oil refinery, a steelmill, trading organiza- tions, and many other enterprises. At one point, it owned a driving range for golfers. Not surprisingly, the govern- ment's business ventures are highly profitable-even the subway system and the power company-and now that stock in some of the ventures is being sold to the public, in a privatization move, the government is awash in cash. The best known of the govern- ment-owned enterprises is Singapore Airlines, which is a paragon of good JANUARY 13,1992 management. The airline has made a profit every year since its founding, in 1972, and it earned over five hundred million dollars in the fiscal year that ended on March 31, 1991-a time when many other airlines had huge losses because the Gulf War reduced travel. Although Singapore is racked by violent thunderstorms most after- noons, Singapore Airlines has never had a crash. It upgrades its fleet so often that it is now replacing all its Boeing 747 s with the newest model, the long-range 747-400. Although the government's big in- vestments in private industry might run counter to the tenets of capitalism, Lee Kuan Yew maintains that they have been a vital ingredient in Singa- , . " Th I pore s economIC success. e on y reason the government moved in was that no entrepreneur had the guts and the gumption and the capital to go in on his own," Lee told me. "So we went in and got it going, using government officials who had the drive and the flair. And we are prepared to go into more high-risk areas where Singa- porean entrepreneurs are unable to carry that risk, either for lack of daring or for lack of capital." Singapore acquired the capital to make these investments in an inven- tive way. The government devised a scheme, or plan-in Singapore, plans are always referred to as schemes-for forced savings on a huge scale. Called the Central Provident Fund, it now takes thirty-four per cent of a worker's salary for a special retirement account; in the past, as much as forty per cent has been withheld. (By manipulating the percentage, the government can inject funds into the economy in peri- ods of recession and cause more to be withheld during boom times, when inflation threatens.) The account pays interest, and the worker can withdraw funds before retirement, but for only two reasons: to buy certain blue-chip stocks, like Singapore Airlines, or to buy a house or an apartment. The fund simultaneously accomplishes three important goals: the government gets a huge pool of investment capital, which at the end of 1990 stood at twenty- three billion dollars; workers gain a stake in the capitalist system through their stock purchases, and help support it at the same time; and Singapore becomes a nation of homeowners- and homeowners want prosperity and political stability.